International history of AML

Chasing Ill-Gotten Gains: A Historical Journey of Anti-Money Laundering Measures

Ancient Beginnings: More Than Buried Treasure (Before 1970s):

2nd century BC – 5th century AD

Emperor Augustus prohibited mixing legal and illegal funds, fearing the dilution of the official currency and potential funding of rebellions.

Roman Empire

7th century AD

The Tang Dynasty enacted laws against "hidden wealth," targeting merchants who concealed profits to avoid taxation. Similar measures existed in India during the Gupta Empire (4th – 6th century AD), highlighting a global awareness of the societal harm caused by hidden wealth.


10th – 15th century AD

The rise of banking institutions spurred concerns about money laundering. Guilds of money changers established self-regulations to prevent the use of their services for illicit purposes. However, these efforts were limited in scope and lacked enforcement mechanisms.

Medieval Europe

The Recent Past: From Patchwork to Progress, with Ground-breaking Individuals and Acts (1970s – 2000s):

The 20th century saw a surge in organized crime and drug trafficking, demanding a more coordinated response. Dive deeper into this transformative era:

Bank Secrecy Act of 1970 (USA): enacted with the support of Senator John McClellan, requires financial institutions to report cash transactions exceeding $10,000 in a single day to the Financial Crimes Enforcement Network (FinCEN) to assist in detecting and preventing money laundering and other financial crimes.

Financial Action Task Force (FATF) – 1989: Established by the G7 nations, FATF aimed to set global AML standards and facilitate international cooperation. This intergovernmental body, with Jean-Louis Fort as a key figure, played a crucial role in creating a unified front against money laundering, issuing 40 Recommendations that became the cornerstone of global AML efforts.

Anti-Money Laundering and Terrorist Financing Act of 2001 (USA): Following the 9/11 attacks, this Act broadened the scope of AML to include terrorist financing. It enhanced information sharing between financial institutions and law enforcement, strengthening the global fight against both money laundering and terrorism.

EU Third Money Laundering Directive (2005): This directive harmonized AML regulations across EU member states, requiring enhanced customer identification, transaction reporting, and suspicious activity monitoring. It also introduced the concept of “gatekeepers,” including lawyers, accountants, and casinos, who were obligated to report suspicious financial activity.

FATF Recommendations Update (2003, 2012): FATF continuously updated its Recommendations, the global AML standard, to address evolving threats and vulnerabilities. The 2003 update focused on terrorist financing, while the 2012 update emphasized risk-based approaches and included guidance on proliferation financing and politically exposed persons (PEPs).

Enhancing Information Sharing and Cooperation:

  1. Egmont Group: This international network of financial intelligence units (FIUs) facilitated information sharing and cooperation between countries on suspicious activity reports (SARs). Egmont Group Chair, Jean-Louis Fort, played a crucial role in promoting cross-border cooperation and standardizing information exchange practices.
  2. Financial Action Task Force (FATF): FATF continued to play a central role in fostering international cooperation by conducting mutual evaluations of countries’ AML/CFT frameworks and identifying non-compliant jurisdictions.
  3. Public-Private Partnerships: Initiatives like the Wolfsberg Group brought together financial institutions and regulators to develop industry best practices and share information on emerging money laundering trends and techniques.

The Future: A Race without a Finish Line:

The future of AML necessitates continuous adaptation and vigilance. Here’s a glimpse into what lies ahead:

Regulation of Emerging Technologies: Governments and regulatory bodies like FATF are actively developing guidelines for virtual assets and other emerging technologies to address the evolving money laundering landscape.

Financial Inclusion and Addressing Root Causes: Fostering financial inclusion and tackling the root causes of crime, such as poverty and inequality, are crucial elements in a holistic approach to combating money laundering in the long run.

Constant Innovation and Collaboration: As criminals adapt their tactics, so must AML measures. Continuous innovation in technology and a strong spirit of international cooperation will be essential to ensure the financial system remains resilient against illicit activity.

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